Report: Wartime Contractors Waste, Steal Tens Of Billions -- Then Come Back For More

WASHINGTON -- The chairmen of the bipartisan Commission on Wartime Contracting decried on Monday a federal system that has allowed contractors in Iraq and Afghanistan to commit fraud -- then get hired again and again.

"For the 200,000 people employed by contractors to provide support and capability in Iraq and Afghanistan, accountability is too often absent, diluted, delayed, or avoided," Republican co-chair Chris Shays, formerly a longtime congressman from Connecticut, said while calling to order a hearing of the commission Monday.

There are so many barriers to suspending or banning contractors with violations that "untrustworthy contractors can continue profiting from government work, responsible businesses may be denied opportunities, and costs to taxpayers can climb," Shays said in a statement co-authored with his Democratic co-chair, Michael Thibault, formerly the deputy director of the Defense Contract Audit Agency.

And that could well be an understatement, the commission noted, because "it might not take full account of ill-conceived projects, poor planning and oversight by the U.S. government, and criminal behavior and blatant corruption by both government and contractor employees."

The report suggested that the government stop using contractors so routinely, start taking oversight more seriously and establish strong interagency standards.

It called for an end to contractors' current role in hiring other contractors, concluding that they tend not to erect the appropriate oversight firewalls.

And most controversially, the report said the extensive use of private security contractors -- which has surged under President Barack Obama -- raises use-of-force issues and creates a gap in legal accountability

So rather than let them run wild, the commission recommended that agencies relying on private security contractors be required to embed government personnel among them who would be "responsible for leadership, command and control, and oversight of all security contractors and operations."

(The commission also promised that its final report, due this summer, will further address the over-reliance on private contractors to provide "movement security" for government workers in war zones. That's a shot across the bow of the State Department.)

The commission's findings, however, are just the latest in a litany of official and journalistic reports about the enormous cost of waste, fraud and corruption in Iraq and, particularly, Afghanistan.

Just last month, the Special Inspector General for Afghanistan Reconstruction warned that the entire $11.4 billion for constructing and maintaining nearly 900 Afghan National Security Forces facilities is at risk due to inadequate planning.

The Special Inspector General for Iraq Reconstruction said in 2009 that an estimated $3 billion to $5 billion in U.S.-funded infrastructure contracting had been wasted there.

McClatchy Newspapers have exposed example after example of waste and abuse in contracts for Afghan reconstruction.

A State Department cable obtained by WikiLeaks revealed late last year that Afghanistan's vice president had been caught carrying $52 million in cash in a Persian Gulf tax haven.

In his remarks at Monday's hearing, Scott Amey, general counsel for the nonprofit watchdog group Project on Government Oversight (POGO), testified that "contract award dollars have increased from approximately $200 billion in fiscal year 2000 to over $535 billion in fiscal year 2010." Meanwhile, however, "contract administration and oversight have decreased because the acquisition workforce is stretched thin," he said.

Since 2002, POGO has maintained a Federal Contract Misconduct Database, which served as the model for the government-created Federal Awardee Performance and Integrity Information System (FAPIIS), due to become publicly available starting in April.

Witnesses at Monday's hearing said, however, that the federal database doesn't adequately record contractors' past performance.

As it happens, the Obama administration recently caved to pressure from contractors and won't be making that past performance data available publicly.

But even internally, witnesses said, the state of the data is abysmal. Of the 1,485 past performance reports required from the Department of Defense, only 140 had been entered into the database. Of the 174 required from the State Department and U.S. Agency for International Development, not a single one could actually be found, although USAID insisted 24 had been entered.

And Dan Gordon, President Obama's administrator for federal procurement policy, said three-quarters of the performance reports that were filed still lacked required documentation.

But judging from POGO's database, Amey testified:

Some of the largest service contractors in Iraq and Afghanistan have checkered histories of misconduct, including instances of shooting civilians, false claims against the government, violations of the Anti-Kickback Act, fraud, retaliation against workers' complaints, and environmental violations.

Amey also raised an all-too-familiar concern, though from another context:

The government's inability to hold all contractors accountable begs the question: Is the government so reliant on large contractors that bad actors are required to preserving legitimate competition and mission accomplishment? This might be the contracting version of "too big to fail."